Contents:

Recently construction industry in Latvia has experienced substantial changes. Stabile increase of construction since 2002 has transformed to a boom in 2006-2007. Year 2008 characterizes with continuation of the boom in first half-year and with the rapid downslide in the second half-year. In 2009 construction turnover fell on third compared with the previous year. The downslide can cause the protracted recession not only in construction industry, but also in the whole national economy. The building boom was formed by the continuous economic increase: increase in income of population and increase of welfare provoked hopes on a further increase of the standard of living. Together with the economic development and increase of the standard of living, the actual real estate fund became too small for market requirements. Taking into account specifics of construction process, its durable character, it was not possible to satisfy the increased demand. Therefore the boom caused the increase in prices of building products. Building costs were not grounded during the boom: wages in construction were so large, that workers from other industries passed in to construction. It caused the increase of wages in the whole national economy. Similarly during the boom quality of building products diminished considerably. Downslide shows all these problems. If previously it was possible to increase profits on enterprises in construction industry or to eliminate losses of ineffective activities by increasing the turnover, prices, etc. then now it is not possible anymore. Therefore now a substantial importance gains the increase in construction industry efficiency, solving problems, which are connected with the balance of demand and supply, labor force, construction utilities and other resources, as also with financing and crediting. In the paper construction demand in Latvia is comprehensively evaluated and compared with the Baltic States and the European Union. State of dwelling funds and factors influencing demand, including solvency of population, desires and necessities are presented. Basing on the analysis, suggestions for improvements in the industry activities are elaborated.

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